To OTC Journal Members:

There's a lot of news to cover in this weekend's edition. The NASDAQ continues to put on a poor showing in December, but as mentioned in a previous edition is entitled to pull back to about the 1330 level. This would represent a 50% retracement of the October/November gains. If we get down to that level we'll have a bargain basement edition with some short term ideas. Most market watchers think we will have a slight upside bias for the remainder of the year. Following is important information on upcoming events and some of the stocks we are currently following.
 

Time To Go Hunting for the Elusive Ten Bagger

In our December 7th edition we alluded to hunting for the "10 Bagger", a term made famous by venerable mutual fund manager Peter Lynch (pictured here) in his best selling bible for the individual investor entitled "One Up on Wall Street". There were two inadvertent typos in the introduction as pointed out by several loyal readers- Peter Lynch managed Fidelity Magellan from 1977 (not 1997) to 1990. We also described the book as infamous, rather than famous, an incorrect use of the word. Special thanks for pointing these mistakes out.

We have identified a company which has the potential to be a Peter Lynch type "10 Bagger" for investors with a two to five year time horizon. Currently trading at 1/250th of its year 2000 high, this NASDAQ listed technology company has been all but abandoned by investors.

However, the company has extraordinary technology. Over the last several quarters sales have been increasing while losses have been decreasing, suggesting a return to profitability is possible. To date, $200 million has been invested in product development.

This company's technology has significant military and home land security applications, which bodes well for growth over the next several years as the Bush Administration spends record amounts in these areas.

In an interview on CNBC this past week, pioneer market technician John Bollinger suggested investors should be looking for "Busted Stocks" as year end tax selling abates in the last two weeks of December. This stock would fit into that category. Once these stocks are completely blown out, a little buying pressure can result in substantial percentage gains.

In our November 20th edition we provided several examples of badly beaten down tech stocks which had rebounded 300% to 400% from absurdly oversold levels.

This company has the potential to follow that pattern. We are wrapping up the due diligence, and plan on introducing a profile on this company next Tuesday, December 17th. Think of it as a Christmas, Hanukkah, or seasonal gift to our members. This could end up being the best idea we have ever covered. Check your inbox on Tuesday- decide for yourself if you agree.
 

Family Room Entertainment (OTC BB: FMLY)- Stock Gives Ground But Is Rebounding as Premier of NARC Draws Near and Movie Grabs Award Nominations

Family Room Entertainment (OTC BB: FMLY), the entertainment production company we first featured in a trading alert in our November 1st edition, dropped from $.38 to $.21 this Monday as there seemed to be one seller around in a hurry to raise cash. Since that day, the stock has firmed and clawed back up the charts on the best consistent volume so far seen.

The rebound in the stock could be attributed to Paramount's launch of an aggressive campaign to make NARC a serious Oscar contender. Bargain hunters are taking advantage of temporary weakness in the stock.

NARC premiers in LA and NY next Friday, December 20th. It will premier nationwide on January 2nd. Paramount is releasing the film in December in order to place NARC in consideration for 2002 Oscars and other prestigious awards.

In fact, recent press on the film has been outstanding, as borne out by the following commentary:

• The Hollywood Reporter, Dec 6-  "Ray Liotta delivers his best performance in years as a conflicted detective." Christy Grosz, The Hollywood Reporter
• Cover of Daily Variety December 2- "A crackling movie from writer-director Joe Carnahan who revitalizes the cop genre. A never-better Ray Liotta set off dangerous sparks as a corrupt Detroit about to be busted by his partner Jason Patric"- Peter Travers, Rolling Stone
• Two Pages inside Daily Variety December 9- "...'Narc' a crackle of a noir by the director Joe Carnahan...The film...has a greatest hits smell...it's compelling. 'Narc" has the velocity of a hot slug from the barrel of a gun".- Elvis Mitchell, The New York Times
• Cover of Variety December 9- "Gripping and gritty! A compelling story that rings true- Jason Patric gives the performance of a lifetime!" Bill Zwecker, WFLD Chicago

This movie promises to be a big money maker. NARC was made for about $6 million, and now major studios are fighting for producer credits on the film. A recent low budget parallel is "My Big Fat Greek Wedding".  After it's production several big Hollywood names fell in love with this movie. It is rumored to have made about $80 million in profits already.

Emmett/Furla put up the required capital to complete NARC when they were on the verge of halting production, and as a result Emmett/Furla has a meaningful profit percentage of the film, a number rumored to be north of 20%.

In a press release issued Friday, Family Room announced NARC has already been nominated for three IFP Independent Spirit Awards which include Best Supporting Actor (Ray Liotta), Best Director (Joe Carnahan), and Best Cinematography (Alex Nepomniaschy). The IFP Independent Spirit Awards ceremony will be televised live on The Independent Film Channel (IFC) at 2:00 p.m. PST on Saturday, March 22, 2003 and will then be re-broadcast at 7:00 p.m. PST on Bravo later that same day.

NARC could end up being as important to shareholders of Family Room as a new drug discovery is to a biotech company. With only a $5.3 million market valuation, Family Room is an outstanding speculation for the high risk end of your portfolio. The current valuation leaves lots of room for upside potential as this company develops more entertainment projects and earns back end profits from those already completed, which include NARC.
 

Calypte Biomed (OTC BB: CALY) Rebounds Friday on Breaking News at the Open

Calypte Biomed jumped out of the gates Friday morning, kicking off what shareholders hope will be a long overdue rebound in the stock. Calypte is the only company in the world with an FDA Approval for an AIDS test kit which uses urine as opposed to blood to determine if an individual is infected with the HIV Virus. Urine testing is considerably easier and less expensive. In 2001 most major US life insurance companies migrated to this test, and the company was rewarded with $6 million in sales in the first year of commercial introduction.

While the AIDS test kit market is substantial in North America, it pales in comparison to the market for AIDS testing worldwide where the spread of HIV has reached epidemic proportions and sample handling is considerably more difficult.

Shares of Calypte have been under pressure recently due to an imbalance of supply vs demand. With capital investment for small companies still non existent, Calypte has issued shares to both raise capital and pay consultants. In spite of the excess supply of stock, Calypte's average trading volume remains very robust at 2.8 million shares daily.

Fueling Friday's rebound was news which came out before the open. Calypte announced it had executed a Memorandum of Understanding (MOU) with the Safe Blood for Africa Foundation, giving exclusive rights to market and distribute Calypte's urine-based HIV-1 antibody tests in sub-Saharan Africa as a blood donor pre-screening tool. Click here to read the entire text of the news release.

The company hopes the MOU will lead to the Calypte test being used to screen the entire African blood supply, which could translate into millions of dollars in sales. It is estimated that 40% of the African blood supply is tainted with the HIV virus, making detection the paramount mission of the Safe Blood for Africa Foundation. 2001 estimates for HIV cases in North America stand at 750,000. The estimate for the African Subcontinent is 14 million. Hence, the importance of this news release to the company.

Because of the imbalance of supply and demand, shares of Calypte should be accumulated for the long term. Investor appetite for this stock is substantial as proven by the 2.8 million average daily volume, but it could take some time for the market to absorb excess supply. However, because of the unique nature of their technology, this could be one of the most exciting $.07 stocks of all time.
 

Take-Two Interactive (NASDAQ: TTWO)- Shares Pounded This Week on Sector Downgrades

Take-Two Interactive, the video game developer we featured in our October 30th edition, was hammered this week after a slew of negative comments on their industry group.

Despite no specific comments about Take-Two individually, the stock dropped from $29 to just over the $23 during the course of the week, giving back the nice gains we had logged from the $26 level when we first published on the stock.

Analysts, who were originally predicting 20% growth in the video game market this Holiday season, now believe this market will only grow by about 7%.

In our October 30th edition we stated we felt $24 would be the ideal entry level for this stock, but a drop below $23 could signal a major trend reversal to the downside. With the stock hovering near $23, it should be watched carefully. 

If you still own it, look and hope for a rebound when the company announces fiscal year end financial results just before the market opens next Tuesday. Despite general weakness in the group, this is by far the hottest video game developer for the Sony PlayStation II. Their current monster hit, Vice City, is still hard to find on the shelves. Take-Tow Interactive is expected to earn $2 per share this fiscal year, and could sell as many as 10 million copies of Vice City.

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MarketByte LLC has been paid a fee of 250,000 free trading shares of Calypte common stock by First Stage Capital for coverage of Calypte Biomed. On August 12, 2002, MarketByte LLC entered into an agreement directly with Calypte Biomed to continue coverage of the company through October 31, 2002. On November 1, 2002, MarketByte LLC and Calypte Biomed to agreed to renew the agreement to extend through January 31, 2003 in return for a pledge by Calypte Biomed to pay $25,000 in cash, and an additional 300,000 shares of free trading stock were pledged by a third party. MarketByte LLC has been paid a fee of $25,000 by Family Room Entertainment for coverage through January 31, 2003. An additional 150,000 free trading shares have been paid by a third party. Please review our policy on selling shares found in the Mission Statement on our home page.

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